Treasury officials warned Brown at the time that the loss of £5bn (€7.4bn) a year in relief could harm pension schemes. Alastair Ross Goobey, chairman of Hermes, the BT pension fund manager, also protested.

Myners said: “There was a strong body of opinion, in the Department of Trade and elsewhere, that UK companies were overdistributing and not spending enough on research and development. Abolition of the tax credit was combined with a reduction of corporation tax to encourage enterprise. I never detected any politician who was against the pension scheme movement.”

Myners said trustees concerned by tax relief removal could have negotiated higher contributions with sponsors. Instead they believed rising stock markets would continue to prop up their schemes. When equities fell, they plunged into deficit.

Ross Goobey said in an open letter to a newspaper that telecoms group BT made good a previous cut in dividend tax relief with an injection of £1bn into its scheme: “Not many companies are able to produce big lump sums of this order, and all will feel the cashflow effects of increased contributions.”

The Treasury subsequently appointed Myners to take charge of a review of the institutional fund management industry.

National Statistics Office data shows business investment trends have been volatile.

Department of Trade and Industry data for 1997 shows UK R&D as a percentage of sales was 1.6%. This hit 2% in 2005 but fell to 1.7% last year. Several sectors perform better but the UK lags overall. In 2005, the US ratio was 4.5%, Japan 4%, Germany 4.1% and France 2.6%.

The Treasury wants the European Union to agree to an extension of tax credits to boost R&D. But Ross Goobey said last week: “For all this tinkering with the tax system, all Brown has achieved is complexity without a clear increase in capital investment or R&D.”